Back in the days when I was trying to learn my craft and had just a single account at TD Waterhouse --remember them? -- I was cold-called by a bond broker from a boutique. I don’t know how he got my name. But we got to talking, and he pitched Ultrapetrol’s bonds to me. I didn’t have any exposure. So I said I’d bite for five. So he did the trade, and I sent him the money to properly open an account. Shortly thereafter, the bonds were called, and I was out with a profit. So the next time he called, I was willing to bite again, and the account grew. Whenever he’d call, we’d chat a bit. He’d make his pitch, and I’d buy.

Predictably, pretty soon he was putting me into stuff I shouldn’t have been buying, like “structured products”. But I was still naïve about bonds, and I bought. But he also put me into other stuff, like munis. One of his pitches was for Smyra GA Hosp Auth’s 1st MTG 6’s of ’28, a new-issue rev, with a min-purchase of ten. For a while, things went along fine. The price stayed near my entry point, and the coupons were regularly paid. But when the 2008-2009 correction came, I got whacked hard on the position, with prices dropping down to mid-80’s (if I’m remembering right), and I hugely regretted buying on no more due-diligence than a broker's word.

Aside: Ain't this the way things are? When he puts you into something that works out, you take credit. When he puts you into something that doesn't work, you blame him. That's why I eventually cut myself loose from him. I knew that if I wasn't making my own decisions, entirely on my own, I'd never learn the game. That was a scary move, to be entirely on one's own in an institutionally-dominated market, sink or swim, owing my every loss and mistake. But also, it was liberating to be owning every win. The markets didn't give me my money, or take it away. It was my own disciple that created my wins, and my own stupidity that created my losses, and I'll never depend on anyone else's judgment again. They aren't me, and my path isn't theirs. So, win or lose, the game I play is always my own.

Maybe out of stubbornness (or simple stupidity), I didn’t sell my position in Smyra. I carried the loss forward. Now, however, it seems as if the Bond Market Goddess has rewarded my patience (or simple stupidity), and the bond is being called next month, which will allow me to get out. Owning a 1st mort bond isn’t a bad place to be in the credit-line, and whenever I can find a corporate bond that is a 1st mort, I’ll try to buy it. But this one muni I’m happy to get rid of. A 6% Federally tax-exempt coupon is decent enough in the current interest-rate environment. But I do not like the long-dated maturity, given that my entry was at par and not a steep discount to par. The principal, when returned to me, will have lost nearly 60% of its purchasing-power due to the erosions of inflation. That’s not a good trade to be making. So I’m happy to be kicked out.

I don't even remember the name of the bond boutique where Joe was at. While I was still with him, he jumped ship to another boutique and got more involved with the equity side of things. I don't regret my time with him. It's just part of the learning process we all have to go through, and some are lucky enough to discover that they really don't like managing their own investments and then have the further luck of finding someone who does a good job of it for them. My neighbor and rod-building mentor is such a person. Though he follows markets in a generally sort of way, as do most Americans now that 401ks and such have become a part of all of lives, he really doesn't have the predator instincts that good investing/trading requires. (He's just too nice a guy.) Also --and very fortuitously-- he's been with the same broker for 30 years, and from the snippets of phone conversations he's relayed to me, his broker really is doing a good job for him in terms of what his client's needs and tolerances really are. So, as always, "One size does NOT fit all". Some people need others to manage their money for them. Some need to do it themselves. The faster you can find which which you are, the happier you're going to be.

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